Loading...
11/16/2021 06. Public hearing and ordinances pertaining to Ad Valorem Taxes to be levied for collection in Fiscal Year 2022 1 „." ,,,T5:;1„.,„4_,,„„\ rr 11 •1:c414114&. i "i enc u nrry 1 BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 6. For Meeting of: November 16, 2021 ITEM TITLE: Public hearing and ordinances pertaining to Ad Valorem Taxes to be levied for collection in Fiscal Year 2022 SUBMITTED BY: Bob Harrison, City Manager Jennifer Ferrer-Santa Ines, Director of Finance and Budget SUMMARY EXPLANATION: This agenda item includes two (2)separate Ordinances. Ordinance A identifies Council's intent to authorize an increase in the tax levy over 2021 levels. It is required by RCW 84.55.120. This is legally necessary to increase the 2022 tax collections by any amount over 2021 levels. Ordinance B fixes the maximum tax levy for collection by the City in 2022. This Ordinance complies with RCW 35.33.135 and in accordance with Article VI I, Section 2 of the City Charter, requires a super-majority approval (i.e. a minimum affirmative vote of five members) by City Council. ITEM BUDGETED: Yes STRATEGIC PRIORITY: Public Trust and Accountability APPROVED FOR SUBMITTAL BY THE CITY MANAGER RECOMMENDATION: Pass Ordinances ATTACHMENTS: Description Upload Date Type ID urainanceA 11/3/2021 Ordinance E Ordinance B 11/3/2021 Ordinance 0 Red Lined Ordinance A 11/3/2021 Backup Material ❑ Red Lined Ordinance B 11/3/2021 Backup Material 2 ❑ Memo and Exhibits 11/3/2021 Cotter Memo 3 ORDINANCE A ORDINANCE NO. 2021- AN ORDINANCE relating to the annual property tax levy; declaring the City Council's intent to increase the City's 2022 regular levy up to 101% along with new construction, annexation, refunds and growth in state-assessed property values from the amount levied the previous year. WHEREAS, RCW 84.55.120 requires a taxing district that collects regular levies to hold a public hearing on revenue sources for the district's following year's current expense budget, including consideration of possible increases in property tax revenues; and WHEREAS, pursuant to RCW 84.55.120 and the City Charter, on November 1, 2021 and November 16, 2021, upon due and proper legal notice, the Yakima City Council held a public hearing to consider the City's general government revenue sources for the 2022 current expense budget, and the total proposed property tax levy amount pertaining to 2022 revenues from real and personal property taxes; and WHEREAS, RCW 84.55.120 provides that no increase in property tax revenue, other than that resulting from the addition of new construction, improvements to property, and any increase in the value of state-assessed property, may be authorized by a taxing district, except by adoption of a separate ordinance or resolution, pursuant to notice, specifically authorizing the increase in terms of both dollars and percentage; and WHEREAS, RCW 84.55.005 sets the limit factor for the increase in the regular property tax levy at the lesser of one hundred one percent or one hundred percent plus inflation, which is defined as the percentage change in the implicit price deflator (IPD) for personal consumption expenditures for the United States as published for the most recent twelve-month period by the bureau of economic analysis of the federal department of commerce by September 25th of the year before the taxes are payable; and WHEREAS, the applicable percentage change in the Implicit Price Deflator was 3.860%; and WHEREAS, RCW 84.55.0101 allows a taxing district to use a limit factor of one hundred one percent upon a finding of substantial need by the legislative authority by a majority vote; and WHEREAS,the City Council, after the public hearing on November 1, 2021 and November 16, 2021, and after duly considering all relevant evidence and testimony presented, has determined that the City requires an increase in property tax revenue from the previous year, along with the addition of new construction and improvements to property and any increase in the value of state-assessed property, in order to discharge the expected expenses and obligations of the City, and as being necessary and in the best interests of the citizens of the City of Yakima; and 4 ORDINANCE A WHEREAS, the maximum levy rate the City of Yakima can levy is $3.10/$1,000 assessed valuation (AV) plus $0.225/$1,000 AV specifically for Firemen's Relief and Pension Fund and will not change as a result of this ordinance; and WHEREAS, property tax is a tax based on ownership of a piece of real estate. A "levied property tax" is generally a tax imposed on property owners, based on the value of their property and the municipal government's needs; and WHEREAS, the city levy rate has decreased from$3.10/$1,000 AV to $2.53/$1,000 AV in 2021 and staff is projecting the levy rate for 2022 to be $2.32/$1,000 AV; and WHEREAS, in order to bring the current levy rate to the maximum allowed, a levy lid lift is required and the City of Yakima residents will need to approve such ballot measure; and WHEREAS, the amount of property tax levied for collection in 2021 was $20,107,989.68 for general government purposes; and WHEREAS, the discretionary increase in property tax levied attributable to the inflation factor for collection in 2022 shall be in the amount of$201,079.90, which is a percentage increase of 1.0%from the previous year; and WHEREAS, the non-discretionary increases in property tax levied for collection in 2022 can only be estimated due to the absence of final values to be provided by the Yakima County Assessor, now, therefore, BE IT ORDAINED BY THE CITY OF YAKIMA: Section 1. The following increases in the regular property tax levy, over the amount of the previous year's levy, are hereby authorized to be cumulatively levied for collection in 2022: A. A discretionary increase of $201,079.90, attributable to the inflation factor which is a percentage increase of 1.0% over the amount levied for collection in 2021; plus B. An estimated increase of$0 for recent annexations; plus C. An estimated increase of$249,373.42 for new construction and improvements to property; plus D. An estimated increase of$53,663.63 for a refund levy; plus E. An increase authorized by state law for state-assessed property values. Section 2. The City Clerk is directed to transmit and file a certified copy of this ordinance with the Board of Yakima County Commissioners and the Yakima County Assessor on or before November 30, 2021. Section 3. Pursuant to Article VI, Section 2 of the Yakima City Charter, this ordinance shall take effect on November 16, 2021. 5 ORDINANCE A PASSED BY THE CITY COUNCIL, signed and approved this 16th day of November, 2021. ATTEST: Patricia Byers, Mayor Sonya Claar Tee, City Clerk Publication Date: Effective Date: 6 ORDINANCE B ORDINANCE NO. 2021- AN ORDINANCE fixing and levying the amount of ad valorem taxes necessary to discharge the expected expenses and obligations for the 2022 Budget for the City of Yakima. WHEREAS, the City Council finds that the total net amount of $20,712,107 in revenue must be raised by ad valorem taxes on real and personal property within the corporate limits of the City of Yakima to discharge the expected expenses and obligations for the 2022 Budget for the City of Yakima; and WHEREAS, property tax is a tax based on ownership of a piece of real estate. A "levied property tax" is generally a tax imposed on property owners, based on the value of their property and the municipal government's needs, now therefore, BE IT ORDAINED BY THE CITY OF YAKIMA: Section 1. There is hereby fixed to be raised by general property taxes upon real and personal property within the City of Yakima the amount of$20,712,107 for the following purposes: General Government Levy Operating Funds $19,782,557 Firemen's Relief & Pension Fund 929,550 Amount of tax levy for General Government Purposes (I) $20,712,107 Special Purpose Tax Levy 0 Total Levy Amount (I) $20,712,107 (1) Includes an additional $100,000 to provide for final adjustments in State assessed, refunds, new construction, and annexation values. Section 2. The City Clerk is directed to transmit and file a certified copy of this ordinance with the Board of Yakima County Commissioners and the Yakima County Assessor on or before November 30, 2021. Section 3. Pursuant to Article VI, Section 2 of the Yakima City Charter, this ordinance shall take effect on November 16, 2021. PASSED BY THE CITY COUNCIL, signed and approved this 16th day of November, 2021. ATTEST: Patricia Byers, Mayor 7 ORDINANCE B Sonya Clear Tee, City Clerk Publication Date: Effective Date: 8 ORDINANCE A ORDINANCE NO.2021- AN ORDINANCE relating to the annual property tax levy; declaring the City Council's intent to increase the City's 2022 regular levy up to 101% along with new construction, annexation, refunds and growth in state-assessed property values from the amount levied the previous year. WHEREAS, RCW 84.55.120 requires a taxing district that collects regular levies to hold a public hearing on revenue sources for the district's following year's current expense budget, including consideration of possible increases in property tax revenues;and WHEREAS,pursuant to RCW 84.55.120 and the City Charter,on November 1, 2021 and November 16,-2021, upon due and proper legal notice, the Yakima City Council held a public hearing to consider the City's general government revenue sources for the 2022 current expense budget, and the total proposed property tax levy amount pertaining to 2022 revenues from real and personal property taxes;and WHEREAS, RCW 84.55.120 provides that no increase in property tax revenue,other than that resulting from the addition of new construction,improvements to property,and any increase in the value of state-assessed property,may be authorized by a taxing district,except by adoption of a separate ordinance or resolution, pursuant to notice, specifically authorizing the increase in terms of both dollars and percentage;and WHEREAS, RCW 84.55.005 sets the limit factor for the increase in the regular property tax levy at the lesser of one hundred one percent or one hundred percent plus inflation,which is defined as the percentage change in the implicit price deflator(IPD)for personal consumption expenditures for the United States as published for the most recent twelve-month period by the bureau of economic analysis of the federal department of commerce by September 25th of the year before the taxes are payable;and WHEREAS,the applicable percentage change in the Implicit Price Deflator was 3.860%; and WHEREAS, RCW 84.55.0101 allows a taxing district to use a limit factor of one hundred one percent upon a finding of substantial need by the legislative authority by a majority vote; and WHEREAS,the City Council,afterthe public hearing on November 1,2021 and November 16, 2021, and after duly considering all relevant evidence and testimony presented, has determined that the City requires an increase in property tax revenue from the previous year, along with the addition of new construction and improvements to property and any increase in the value of state-assessed property,in order to discharge the expected expenses and obligations of the City, and as being necessary and in the best interests of the citizens of the City of Yakima; and 9 ORDINANCE A WHEREAS,the maximum levy rate the City of Yakima can levy is$3.10/$1,000 assessed valuation(AV)plus$0.225/$1,000 AV specifically for Firemen's Relief and Pension Fund and will not change as a result of this ordinance; and WHEREAS, property tax is a tax based on ownership of a piece of real estate. A"levied property tax"is generally a tax imposed on property owners,based on the value of their property and the municipal government's needs;and WHEREAS,the city levy rate has decreased from $3.10/$1,000 AV to$2.53/$1,000 AV in 2021 and staff is protecting the levy rate for 2022 to be$2.32/$1,000 AV;and WHEREAS,in order to bring the current levy rate to the maximum allowed,a levy lid lift is required and the City of Yakima residents will need to approve such ballot measure;and, Formatted:Font:Not Bold WHEREAS,the amount of property tax levied for collection in 2021 was$20,107,989.68 for general government purposes;and WHEREAS, the discretionary increase in property tax levied attributable to the inflation factor for collection in 2022 shall be in the amount of$201,079.90,which is a percentage increase of 1.0%from the previous year;and WHEREAS, the non-discretionary increases in property tax levied for collection in 2022 can only be estimated due to the absence of final values to be provided by the Yakima County Assessor,now,therefore, BE IT ORDAINED BY THE CITY OF YAKIMA: Section 1. The following increases in the regular property tax levy,over the amount of the previous year's levy,are hereby authorized to be cumulatively levied for collection in 2022: A. A discretionary increase of$201,079.90,attributable to the inflation factor which is a percentage increase of 1.0%over the amount levied for collection in 2021;plus B. An estimated increase of$0 for recent annexations; plus C. An estimated increase of$249,373.42 for new construction and improvements to property; plus D. An estimated increase of$53,663.63 fora refund levy;plus E. An increase authorized by state law for state-assessed property values. Section 2. The City Clerk is directed to transmit and file a certified copy of this ordinance with the Board of Yakima County Commissioners and the Yakima County Assessor on or before November 30,2021. Section 3. Pursuant to Article VI,Section 2 of the Yakima City Charter,this ordinance shall take effect on November 16, 2021. 10 ORDINANCE A PASSED BY THE CITY COUNCIL,signed and approved this 4 —16th day of November, 2021. ATTEST: Patricia Byers, Mayor Sonya Claar Tee,City Clerk Publication Date: Effective Date: 11 ORDINANCE B ORDINANCE NO.2021- AN ORDINANCE fixing and levying the amount of ad valorem taxes necessary to discharge the expected expenses and obligations for the 2022 Budget for the City of Yakima. WHEREAS, the City Council finds that the total net amount of $20,712,107 in revenue must be raised by ad valorem taxes on real and personal property within the corporate limits of the City of Yakima to discharge the expected expenses and obligations for the 2022 Budget for the City of Yakima WHEREAS, property tax is a tax based on ownership of a piece of real estate. A"levied- Formatted:Indent:Fist line: 0.5',Space After: 6 pt,Line property tax"is generally a tax imposed on property owners, based on the value of their property spacing: At least 15 pt and the municipal government's needs,now therefore, BE IT ORDAINED BY THE CITY OF YAKIMA: Section 1. There is hereby fixed to be raised by general property taxes upon real and personal property within the City of Yakima the amount of$20,712,107 for the following purposes: General Government Levy Operating Funds $19,782,557 Firemen's Relief& Pension Fund 929,550 Amount of tax levy for General Government Purposes(1) $20,712,107 Special Purpose Tax Levy 0 Total Levy Amount(1) $20,712,107 (1) Includes an additional $100,000 to provide for final adjustments in State assessed,refunds,new construction, and annexation values. Section 2. The City Clerk is directed to transmit and file a certified copy of this ordinance with the Board of Yakima County Commissioners and the Yakima County Assessor on or before November 30, 2021. Section 3. Pursuant to Article VI,Section 2 of the Yakima City Charter,this ordinance shall take effect on November 16, 2021. PASSED BY THE CITY COUNCIL, signed and approved this 1st 16th day of November,2021. 12 ORDINANCE B ATTEST: Patricia Byers, Mayor Sonya Claar Tee,City Clerk Publication Date: Effective Date: 13 fit-' o -, FINANCE MEMORANDUM TO: The Honorable Mayor and Members of City Council Bob Harrison, City Manager FROM: Jennifer Ferrer-Santa Ines, Finance Director Kimberly Domine, Finance Division Manager DATE: November 3, 2021 RE: 2022 Property Tax Levy Staff respectfully recommends the approval of both Ordinances A and B, necessary to set the 2022 property tax levy. Council Action to be Taken Review and Approve Ordinance A and Ordinance B, attached. Background This agenda item includes two(2) separate ordinances, steps required by statute to establish the property tax levy. Property tax is a tax based on ownership of a piece of real estate. A "levied property tax" is a tax imposed on property owners, based on the value of their property and the municipal government's needs. Ordinances A and B will set the property tax levy for collection in 2022, based on the limit of a 1% increase over the prior year base levy, plus new levies for construction and annexation. The law defines the rate of inflation as measured by the Implicit Price Deflator(IPD)for consumer goods. For this year, as confirmed by MRSC, the IPD increased to 3.860% which statutorily allows for an increase of 1% if city council determines there is substantial need. The 2022 budget was developed assuming a 1% increase in the overall levy. • Exhibit I is the County Assessor's communication of assessed valuation. • Exhibit II details the calculation of the property tax levy with a base of 101% of the prior year using preliminary information obtained from the County Assessor's office. According to state law, the certification of ad valorem taxes must be filed with the Board of Yakima County Commissioners on or before November 30, 2021 or the City will receive no funding from this source in 2022. • Exhibit III is the County Treasurer's communication of prior year refunds. 14 FINANCE • Ordinance A identifies Council's intent to authorize an increase in the tax levy over 2021 levels. It is required by RCW 84.55.120. This is legally necessary to increase the 2022 tax collections by any amount over 2021 levels. • Ordinance B fixes the maximum tax levy for collection by the City in 2022. This ordinance complies with RCW 35.33.135 and in accordance with Article VII, Section 2 of the City Charter, requires a super-majority approval (i.e. a majority plus one or five members) by City Council. Discussion —Valuation and Property Tax The maximum rate the City of Yakima can levy is $3.10/$1,000 assessed valuation (AV) plus $0.225/$1,000 AV specifically for Firemen's Relief and Pension Fund. According to RCW 84.55.0101, a city can levy up to 101% plus new construction, annexation, and refunds. In order to bring the current levy rate to the maximum allowed, a levy lid lift is required and the City of Yakima residents will need to approve this ballot measure. If the City were to levy the maximum rate (levy lid lift approved by City of Yakima residents), the estimated increase in property tax revenue would be an additional $9,700,000. The total 2022 City of Yakima proposed property tax levy includes the 101% levy, and amounts for new construction and prior year refunds. The total operating tax rate for next year is estimated to be $2.32 per $1,000 of Assessed Valuation (AV), a decrease of approximately $0.21 per thousand of Assessed Valuation. The current rate is $2.53 per $1,000 of Assessed Valuation (AV). •SERVICE •E EXHIMT I "' S j • • e ** .,** O • a • **"`** r'y i YAICIMIA GOUNTY Sonya Clar Tee City of Yakima 129 North Second Street Yakima, WA 98901 September 22nd, 2021 The attached Levy calculation forms include information needed for your 2022 property tax levy certification. Because certain elements of value are not provided to the County Assessor until later in the year the calculations include certain estimates. In addition, exemptions and changes to property can change the total assessed value which can adjust the final maximum levy in some cases. The forms go into more detail, but the most important numbers are as follows: 2022 Maximum Allowed (estimate) $20,537,977.80 2022 1%Amount $201,079.90 2022 Maximum % 1.0000% 2022 Maximum $ Increase $201,079.90 If you are choosing some amount other than the 1%increase, please check with me to go over what your request should be. It is always a good idea to add to the Maximum Allowed in your levy requests to account for growth. Forms from the Department of Revenue have been included and originals can be found at https://dor.wa.gov/get-form-or-publication/forms-subject/property-tax-forms#Levy. If you have any questions, you may contact me at(509) 574-1112 or by e-mail at jacob.tate@co.yakima.wa.us. Sincerely, 1°4 ' Jacob Tate Property Database Manager Yakima County Assessors Office Yakima County Assessor 128 N 2nd St#112, Yakima, WA 98901 I Phone(509)574-1100 I Fax(509)574-1101 16 District Name Yakima City Levy Calculations have changed in the last few years. To get to what you may request and how you should word your request we are supplying the below information. Current Tax Base* $8,861,273,159 *This includes estimated state assessed and personal property amounts. Current Levy Max Amount Calculations 2021 Max Lawful $20,087,727.10 Times 1.01 (if you certify a resolution adopting an increase) = $20,288,604.37 Additional Request Monies For NC= NC amount *last years certified Rate. $98,424,460 Times 2.53365296= $249,373.42 To calculate additional funds for annexations you take the above two numbers summed and multiply by what the current rate would be using the above estimated tax base minus the annexation amount. Multiplied by Rate of: 2.3177 = $0.00 Final Before State Rate Limit: $20,537,977.80 Maximum Levy Request is lesser of above or Maximum Statutory Rate*Tax base. Maximum State Limit $30,409,642.97 Max Current Request Allowed $20,537,977.80 The Resolutions/Ordinances must reference a%increase over last years levy, and a$amount increase over last years levy. You must also certify a total budget request amount. The% increase over last year*does not*include added funds for New construction, State Assessed or Annexations. The budget request must include those as it certifies the total amount you request. You are still limited to the above Maximum Current Request Allowed. Previous Amount Levied $20,107,989.68 Funds for New Construction $249,373.42 Funds for Annexations $0.00 Starting Point $20,357,363.10 Plus 1% of Previous Amount($ increase) $201,079.90 Plus 1% of Previous Amount(total) $20,558,443.00 $ increase over previous year if you take maximum: $180,614.69 % increase over previous if you take maximum: 0.8982% If you have any questions please call Jacob Tate at (509) 574-1112. EXHIBIT II City of Yakima Property Tax Limitation Calculation 2021 Tax 2022 Assessed Rate Rate/ Levy Value Applied Change Dollars 2021 Tax Rate $ 7,936,363.031 $ 2.5337 $ 20,107,989.68 Implicit Price Deflator (IPD) -3.860% Increase 1.0000% $ 201,079.90 Substantial Need (resolution required) 0.0000% $ - 2022 Tax Rate @ 101% $ 20,309,069.58 Valuation Increase-5.35% 826,485.668 n/a 10.4139% n/a New Construction- 1.41% 98,424.460 2.5337 1.2402% $ 249,373.42 State Assessed Value - 2.5337 0.0000% $ - Tax Limit Before Annexations 8,861,273.159 2.3200 $ 20,558,443.00 Add for Annexation - 2.3177 $ - Limit for Subsequent Years 8,861,273.159 2.3200 $ 20,558,443.00 Plus Refunds(estimate) $ 53,663.63 Plus Contingency $ 100,000.00 Total-ordinance $ 20,712,106.63 ($0.2136) 2021 Maximum Assessed Maximum Levy State of Washington Constitutional Limits Value Rate Dollars 2021 Assessed Valuation $ 8,861,273.159 3.6000 $ 31,900,583.37 Less: Library Levy 0.5000 $ 4,430,636.58 2021 Levy for Collection in 2022 3.1000 $ 27,469,946.79 EXHIBIT W YAKIMA COU NT'Y TREASURER L t, ' A_ Ilene Thomson County Treasurer MEMORANDUM October 7, 2021 TO: Taxing Districts FROM: Ilene Thomson, Yakima County Treasurer Subject: Tax Year 2022 — Refund Levy— RCW 84.69.180 RCW 84.69.180 allows taxing districts other than the state to levy an annual refund levy to recover the tax dollars lost to the district for the purpose of: a. Funding refunds paid within the preceding twelve months, including interest, and b. Reimbursing the taxing district for taxes abated or cancelled, offset by any supplemental tax collected within the preceding twelve months. RCW 84.69.180 also gives a taxing district the authority to recover that portion of their levy which was reduced within the preceding twelve months due to tax record adjustments such as senior exemptions, DOR exemptions, government exemptions and others. We calculate the information from October 1st through September 30th of each year. By establishing this earlier date, each district will have the opportunity to discuss this levy with your Board of Directors prior to submitting your levy requests. We will be providing this information to the County Assessor who you would work with, as you do with all levies. In addition, we will continue to submit the calculation to the Board of County Commissioners. Listed below are the refund levy amounts calculated in accordance with RCW 84.69.180 for the period of 10/01/2020 through 09/30/2021, including interest paid. District Name Fund Name Amount_ Cityof Yakima Expense $53,663.63 If you have any questions or concerns, please contact our Accounting Division at 574-2780 or Treasacc t{1o. 1akima.wa.us 128 North Second Street,Room 115 •PO Box 22530•Yakima,WA 98907-2530 Phone: 509-574-2800 • FAX: 509-574-2801 www.yakimacounty.us/treasurer